OPPENHEIMER: Goldman was wrong about $200 oil, and it'll also be wrong about $20 oil

Oppenheimer issued a note Thursday arguing that oil is looking
for a "new normal" price around $65 to $75 a barrel.

But on the way to making its point, the firm also took a shot at
Goldman Sachs' history of getting calls on the price of oil
wrong.

On Thursday, Oppenheimer wrote (emphasis ours):

We dismiss the $20 oil scenario, as we dismissed the $200
oil view in 2008 — both came from the same source. We
think oil prices will remain lower for longer, until the
objectives behind the collapse are met, and we don't see this
happening any time soon. We think the market is still searching
for the new normal, which is not $50 and is not $100 either, but
more likely in the $65-$75 range.

That "same source" is Goldman Sachs.

Earlier this month,
oil analysts at Goldman Sachs said that in a worst-case
scenario, oil prices could be headed to $20 a barrel as the
market flushes out oversupply from OPEC and US suppliers who kept
pumping oil despite a more than 50% crash in prices in the last
year.

The 2008 call Oppenheimer refers to is the
now-infamous assertion by Goldman that oil would rocket up to
$200 a barrel as part of what was then called the "demand shock."
Recall that back in the middle of the last decade the big idea
around oil was that we'd reached "peak oil" and were doomed to
run out of oil faster than the world was ready for.

Under this idea, oil prices were rising and would reach a new,
permanently high plateau.

But US shale activity in the last few years has turned this
thesis on its head as US output surged.

EIA

And while oil, of course, is still a scarce resource, fears about
peak
oil have been headed off.

As for its broader point Thursday, Oppenheimer thinks OPEC, the
12-member oil cartel led by Saudi Arabia, which has most
seriously felt the squeeze from lower oil prices, probably
overplayed its hand by dismissing the US shale revolution.

Oppenheimer notes that shale production from the US has boosted
global production by about 4 million barrels per day, or about
the combined output of Kuwait and the United Arab Emirates.

Ultimately, the firm thinks OPEC's economies will be forced to
diversify, live within their means, and embrace a "new normal"
for the oil market.